It is just three weeks into the new year, and South Africans have spent most of it without consistent power, with little sign of improvement on the horizon. Rolling blackouts of up to 10 hours a day are exacerbated by ageing infrastructure and unplanned outages. Simply put, Eskom – South Africa’s national utility – cannot produce enough electricity to go around. So acute is the crisis that President Cyril Ramaphosa cancelled his planned trip to the World Economic Forum in Davos to deal with it.
This is not a new problem. Loadshedding, as the blackouts are termed here, has been part of South African life since 2007. But what first appeared to be a temporary fumble, caused by short-sighted planning, has evolved into a national energy crisis that is impacting every facet of everyday life.
Without reliable electricity, food security is threatened, mobile networks are disrupted, industrial activity is slowed and small businesses are drowned by the rising cost of daily operations and decreasing profitability. Some economists estimate the power crisis is costing the country up to $233-million a day.
South Africa is already the world’s most unequal country, with over 18-million of its 62-million residents living in extreme poverty. The power crisis is making these inequalities ever-more stark. Basic activities like storing precious food; finishing homework after school; accessing the internet for job opportunities; and safely travelling home after a night shift become impossible for the poor in the absence of reliable electricity. Meanwhile, South Africa’s elites are equipping their homes with solar panels, battery packs and generators to ensure that their lights stay on.
A broken model
Looking at Eskom’s recent history and examining the policies which govern its operation, there are three primary sources of the utility’s dysfunction: debt, corruption and corporatisation.
Eskom is plagued by a paradoxical financial model: it is publicly owned but has a corporate mandate. In other words, Eskom must provide electricity as a universal public good, while at the same time remaining profitable by making end-users pay the full costs of electricity generation and supply.
Several obstacles have hindered Eskom’s revenue raising efforts. Firstly, there is the reality of widespread poverty, heightened by mass unemployment and a stagnant economy. Millions simply cannot afford the electricity Eskom sells.
Compounding the latter is the obstacle of numerous municipalities failing to make their payments to the energy utility. Eskom’s management has stated that municipalities across the country owe Eskom a stunning $3-billion. One source of this debt is the misappropriation of funds by various municipalities. A 2021 report released by the Public Affairs Research Institute found that from 2014 to 2020, $2.2-billion that was meant to fund free basic electricity for poor households was instead used by municipalities for “unauthorised” reasons.
As revenue streams narrow, Eskom cannot maintain its power stations or build new energy generation capacity. Nor can it service its growing debt. Currently, Eskom’s total debt stands at $22-billion.
To make matters worse, a hefty chunk of that debt – some $3.75-billion from the World Bank – went towards the construction of two massive new coal- fired power stations, Medupi and Kusile, which have been plagued by construction delays, cost overruns and endemic corruption. Initially priced at $4.7-billion each, they have since 2008 cost Eskom nearly double that at $17.5-billion in total. Neither is fully operational yet.
A toxic mess
Solving South Africa’s energy crisis requires the total rejuvenation of Eskom as a socially owned, publicly funded utility. Undertaking this transformative project necessitates building new generation capacity and maintaining current infrastructure while beginning a substantial transition to renewable energy and a low-carbon economy.
To effectively execute this project, the government must abandon the full cost recovery model, cancel its odious debt to the World Bank, effectively eradicate corruption within the utility and throw away austerity policies which stop the state from strategically spending on what should be universal goods such as education, healthcare and electricity.
Easier said than done, however. The outgoing Eskom chief executive, Andre de Ruyter, was recently the target of an alleged assassination attempt by poisoning – to deter him, he says, from implementing his reform agenda. And even if such reforms are successful, it is likely to be years before South Africa’s grid is able to keep all the country’s lights on. ■
Andile Zulu is the Energy Democracy Officer at the Alternative Information and Development Centre. He writes in his own capacity.
*This Analysis was first published by The Continent